Hi all. Long time listener, first time caller. Just getting serious about financial independence (way too late and trying to make amends). Apologies in advance for the length of the post but it is helpful to get it all down on paper. Feel free to spot the obvious holes. Advice welcome.
A little about my self. Im a 38 year old lawyer originally from the UK but now living in Hong Kong. I have been an expat from around 8 years now (almost 4 years in Honkers). Im married and we don't have any children. My wife is 3 years younger than me and is a teacher. We are looking to achieve financial independence in approx. 7 years and may or may not keep working at that point (what a wonderful issue!). And onto the numbers. Below I set out our current expenses. I find a number of these items embarrassing
. However, in mitigation i would add that Hong Kong is the most expensive city in the world and I am aiming to cut the rent by at least 35% when my current lease ends in a couple of months. Deep breath, and here we go....
Annual (US$) %
X Base 260,477 29.34%
X Bonus 418,171 47.10%
Y Base 37,471 4.22%
Y Bonus 1,561 0.18%
Rental Income 70,928 7.99%
Tax 99,256 11.18%
Gross Income 887,865 100.00%
Total Net Income 689,353
Property Liabilities
Mortgage Interest 24,150 3.50%
Management Fees 17,732 2.57%
Total 41,882 6.08%
Household
Rent 116,129 16.85%
Utilities 3,871 0.56%
TV / Internet / Telephone 3,060 0.44%
Groceries 15,484 2.25%
Helper Salary 7,733 1.12%
Total 146,276 21.22%
Work Costs
Lunch / Coffee 774 0.11%
Commuting 310 0.04%
Total 1,084 0.16%
Saving
MPF 5,806 0.84%
Private Pension 37,200 5.40%
5% Work Capital 33,932 4.92%
Other 370,069 53.68%
Mortgage Principal 24,150 3.50%
Total 471,158 68.35%
Other
Mobile(s) 1,080 0.16%
Travel 15,484 2.25%
Entertainment 7,742 1.12%
Medical 1,548 0.22%
Pets 774 0.11%
Clothes 1,548 0.22%
Dentistry 774 0.11%
Total 28,951 4.20%
Grand Total 689,351 100.00%
Our NAV is approx. US$1,500,000. I should note that I don't really look at NAV too closely given I only use it as a guide (more relevant to a paper portfolio when i build one!). Im more concerned with income generation (appreciating that there is a link between NAV and income generation).
In terms of assets:
(a) We have two rental properties in London valued at approx US$1,800,000 (carrying leverage at US$600,000). They are new build with a 5 year fixtures and fittings guarantee. We expect to pay the mortgages off in the next two years. Once we have paid the management fees, ground rent, tax etc they will generate (post mortgage) approx. US$50,000 in todays money.
(b) a private pension which we pay into each month valued at around US$120,000;
(c) invested capital with the firm I work with of approx US$80,000;
(d) cash of US$20,000 (I appreciate this is low but im comfortable with this (I have a 6 month notice period and good insurance through work); and
(e) various old work pensions valued at around US$100,000.
In the coming 7 years we hope, in the following order, to:
(1) clear the mortgages on the rental properties (I know the arguments re clearing debt versus investing and we are letting the heart rule over the spreadsheet on this one.
(2) invest in a paper portfolio of some kind (and this is a key area where I need to educate my self.
(3) buy a principal residence.
(4) build a pot of cash to pay for travel.
In todays money, I think we could live very well on US$75,000 but this may depend on where we end up in the world. I came up with this figure by taking my current expenses, removing the mortgage, work related costs and saving(s) and increasing the amount spent on travel, entertainment and medical (this to us is a big unknown but given we can choose where we end up, we will take this into consideration when choosing where to live).
Apologies for the mega post but I find it cathartic to set it all out and want to make sure that i am not completely crazy in my thinking. All advice welcome.
Thanks for reading.
A little about my self. Im a 38 year old lawyer originally from the UK but now living in Hong Kong. I have been an expat from around 8 years now (almost 4 years in Honkers). Im married and we don't have any children. My wife is 3 years younger than me and is a teacher. We are looking to achieve financial independence in approx. 7 years and may or may not keep working at that point (what a wonderful issue!). And onto the numbers. Below I set out our current expenses. I find a number of these items embarrassing
. However, in mitigation i would add that Hong Kong is the most expensive city in the world and I am aiming to cut the rent by at least 35% when my current lease ends in a couple of months. Deep breath, and here we go....Annual (US$) %
X Base 260,477 29.34%
X Bonus 418,171 47.10%
Y Base 37,471 4.22%
Y Bonus 1,561 0.18%
Rental Income 70,928 7.99%
Tax 99,256 11.18%
Gross Income 887,865 100.00%
Total Net Income 689,353
Property Liabilities
Mortgage Interest 24,150 3.50%
Management Fees 17,732 2.57%
Total 41,882 6.08%
Household
Rent 116,129 16.85%
Utilities 3,871 0.56%
TV / Internet / Telephone 3,060 0.44%
Groceries 15,484 2.25%
Helper Salary 7,733 1.12%
Total 146,276 21.22%
Work Costs
Lunch / Coffee 774 0.11%
Commuting 310 0.04%
Total 1,084 0.16%
Saving
MPF 5,806 0.84%
Private Pension 37,200 5.40%
5% Work Capital 33,932 4.92%
Other 370,069 53.68%
Mortgage Principal 24,150 3.50%
Total 471,158 68.35%
Other
Mobile(s) 1,080 0.16%
Travel 15,484 2.25%
Entertainment 7,742 1.12%
Medical 1,548 0.22%
Pets 774 0.11%
Clothes 1,548 0.22%
Dentistry 774 0.11%
Total 28,951 4.20%
Grand Total 689,351 100.00%
Our NAV is approx. US$1,500,000. I should note that I don't really look at NAV too closely given I only use it as a guide (more relevant to a paper portfolio when i build one!). Im more concerned with income generation (appreciating that there is a link between NAV and income generation).
In terms of assets:
(a) We have two rental properties in London valued at approx US$1,800,000 (carrying leverage at US$600,000). They are new build with a 5 year fixtures and fittings guarantee. We expect to pay the mortgages off in the next two years. Once we have paid the management fees, ground rent, tax etc they will generate (post mortgage) approx. US$50,000 in todays money.
(b) a private pension which we pay into each month valued at around US$120,000;
(c) invested capital with the firm I work with of approx US$80,000;
(d) cash of US$20,000 (I appreciate this is low but im comfortable with this (I have a 6 month notice period and good insurance through work); and
(e) various old work pensions valued at around US$100,000.
In the coming 7 years we hope, in the following order, to:
(1) clear the mortgages on the rental properties (I know the arguments re clearing debt versus investing and we are letting the heart rule over the spreadsheet on this one.
(2) invest in a paper portfolio of some kind (and this is a key area where I need to educate my self.
(3) buy a principal residence.
(4) build a pot of cash to pay for travel.
In todays money, I think we could live very well on US$75,000 but this may depend on where we end up in the world. I came up with this figure by taking my current expenses, removing the mortgage, work related costs and saving(s) and increasing the amount spent on travel, entertainment and medical (this to us is a big unknown but given we can choose where we end up, we will take this into consideration when choosing where to live).
Apologies for the mega post but I find it cathartic to set it all out and want to make sure that i am not completely crazy in my thinking. All advice welcome.
Thanks for reading.
